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Justice Department launches antitrust probe into four automakers around emissions deal with California

The deal reportedly ‘enraged’ President Trump

Exhaust Gases Photo by Florian Gaertner / Photothek via Getty Images

The Justice Department has launched an antitrust investigation into four major automakers that struck an independent deal with California to reduce vehicle emissions, The Wall Street Journal reports.

According to the Journal, federal investigators are trying to figure out whether the four automakers — Ford, Volkswagen, BMW, and Honda — engaged in anticompetitive behavior when they agreed with each other to follow California’s fuel economy standards, which largely matches the cleaner vehicle plan put in place by the Obama-era Environmental Protection Agency.

The Trump administration has been working feverishly to roll back the Obama administration’s fuel economy standards since Trump took office in 2017. The deal, which was announced in July, was seen as a possible victory in the fight to manufacture less polluting cars in the face of a worsening climate crisis.

Under the deal, automakers will have to increase the fuel economy of their new vehicle fleets to nearly 50 miles per gallon by model year 2026 by reducing their greenhouse gas emissions by 3.7 percent each year. Automakers will also have flexibility in how they meet each year’s emissions goal. The deal leaves room for other automakers to adopt the standards.

The deal reportedly “enraged” President Trump, who responded by summoning other automakers — General Motors, Fiat Chrysler, and Toyota — to the White House to pressure them to stick with the administration’s plan. GM CEO Mary Barra met with Trump on Thursday, calling the meeting “productive and valuable.”

The news of the antitrust probe is sure to ratchet up pressure on the entire auto industry that has been caught between the Trump administration, which wants to allow car companies to make dirtier vehicles, and California, which has the ability to set its own air standards since the Clean Air Act was established in 1970.

The White House has been trying to revoke California’s right to establish its own rules alongside its attempt to lower the national emissions standards, which is part of a larger (and, so far, losing) fight with the state. A dozen states follow California’s lead on emissions rules, and Canada has recently agreed as well. The EPA has called California’s side deal with the four automakers “a stunt.”

A spokesperson for BMW confirmed that it received a letter from the Justice Department’s antitrust division requesting information concerning the proposed agreement with California. “We look forward to responding to the Department of Justice to explain the planned CARB framework agreement and its benefits to consumers and the environment,” the spokesperson said.

A spokesperson for the Justice Department declined to comment. Spokespersons for Ford, Honda, and Volkswagen did not immediately respond.

Updated September 6, 2019, 1:22 pm ET: Added comments from BMW.